India Inflation Under Control Due to Lower Food and Energy Prices

India’s inflation rate fell to a five-year low in September because of lower food and fuel prices.

The Wholesale Price Index (WPI), India’s main gauge of inflation, rose 2.38% in September from a year earlier. That is the smallest increase since October 2009.

India’s WPI rose by 3.74% in August.

Despite the moderation, analysts caution that the central bank is unlikely to lower the cost of borrowing in the near future.

That is because of poor monsoon rains that could affect future crops and drive food prices back up.

In addition, continuing geopolitical tensions could also see oil prices spiking up again.

Data also showed that falling global crude oil prices helped drive down India’s fuel inflation to 1.3% in September from 4.5% in August.

The figures came from India’s Commerce Ministry, which said food inflation declined by 1.4% as a result of lower prices for tea, fruits and vegetables, as well as maize, chicken and fish.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza